CymaBay Therapeutics, Inc. (NASDAQ:CBAY) Q3 2023 Earnings Call Transcript November 7, 2023
CymaBay Therapeutics, Inc. misses on earnings expectations. Reported EPS is $-0.32 EPS, expectations were $-0.3.
Operator: Good day, ladies and gentlemen, and welcome to CymaBay’s Third Quarter 2023 Financial Results and Business Update Conference Call. At this time, all participants are in a listen-only mode. Following the formal remarks, we will open the call for your questions. Please be advised that the call will be recorded at the company’s request. It is also being webcast live on the Investors section at the CymaBay website at www.cymabay.com. Now, I would like to turn the call over to Mr. Paul Quinlan, General Counsel at CymaBay. Mr. Quinlan, please proceed.
Paul Quinlan: Thank you, operator and good afternoon everyone. I hope that you have had a chance to review the press release we issued announcing our third quarter 2023 financial results and business updates. You can access that release on our website under the Investors tab. Joining me on the call today are Sujal Shah, Chief Executive Officer; Chuck McWherter, Chief Scientific Officer and President of R&D; Lewis Stuart, Chief Commercial Officer; and Harish Shantharam, Chief Financial Officer. Following our prepared remarks, we will open the call for Q&A. Before we begin, I’d like to remind everyone that statements made during this conference call, including the Q&A session relating to CymaBay’s expected future performance, business prospects, events or plans, including clinical plans, regulatory approvals, funding and repayment schedules, anticipated timelines and data release dates, cash runway and planning for commercialization are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995.
Although, the company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, actual outcomes, and results are subject to risks and uncertainties and could differ materially from those forecast due to the impact of many factors. The company assumes no obligation to update or supplement any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law. Participants are directed to the cautionary statements set forth in today’s press release, as well as the risk factors set forth in CymaBay’s quarterly and annual reports filed with the SEC for factors that could cause actual results to differ materially from those anticipated in the forward-looking statements.
This conference call is the property of CymaBay and any recording or rebroadcast is expressly prohibited without the written consent of CymaBay. At this time, I’d like to turn the call over to Sujal.
Sujal Shah: Thank you, Paul, and good afternoon. We appreciate everyone taking the time to listen to our updates at CymaBay in the midst of a busy earnings period. 2023, has been a remarkable year for CymaBay, and the third quarter was especially momentous with the achievement of multiple significant milestones advancing us towards our goal of improving the lives of people living with PBC. First, seladelpar met its primary and two key secondary endpoints with high statistical significance in the Phase III pivotal RESPONSE trial for patients with PBC. The consistency and depth of the clinical data set generated from Phase II, enhance and now response demonstrates that seladelpar has the potential to be the first-ever approved treatment for patients with PBC to significantly reduce both markers related to the risk of disease progression and symptoms.
Reaching this milestone required focus, resilience and perseverance by our team here at CymaBay, but it would not have been possible without the commitment of our partners, including the patients who participated in all our clinical trials, their family members and caregivers, investigators and patient advocacy groups who are part of this journey. The reaction from all quarters on the response results have been very positive and Lewis will provide color on some of the feedback we've received from the medical community and patient advocacy groups later in his remarks. Our team is now working with singular focus to deliver high-quality regulatory applications for approval as soon as possible and are actively engaged with FDA, MHRA and EMA. We were very encouraged by the FDA's granting of a revised breakthrough therapy designation for seladelpar in PBC that now covers the treatment of PBC, including pruritus in patients who are inadequate responders or intolerant to UDCA without cirrhosis or with compensated cirrhosis.
The unmet needs for people living with PBC today are for treatments that provide a significantly lower risk of disease progression, while also reducing symptoms across a broad spectrum of patients, including those with compensated cirrhosis. We believe that seladelpar is the only drug in development for PBC that has received a breakthrough designation that includes pruritus and compensated cirrhosis. We look forward to working with the FDA and other regulatory agencies as they conduct their regulatory review post completion of our submission. Our commitment to PBC runs deep, and we will continue to add to what we believe is already the largest clinical development program in PBC. The IDEAL study that we announced earlier in the third quarter targets partial responders to first-line treatment with alkaline phosphatase levels between 1 and 1.67 times the upper limit of normal, who continue to have higher risk of disease progression and negative outcome.
We believe that this study has the potential to be transformational for this neglected population, potentially resetting expectations for second-line treatment. In September, we also announced the initiation and design of our long-term outcome study AFFIRM that will serve as our post-marketing regulatory commitment. Leveraging years of dialogue with regulators and work interrogating rich data sets gathered by the global PBC study group, we designed a unique event-driven fixed duration study evaluating seladelpar in patients with compensated cirrhosis, assessing its benefit on outcomes relative to placebo. The design of AFFIRM attempts to also address the challenges inherent in recruiting placebo-controlled outcome trials in PBC. These studies demonstrate our unwavering commitment to advancing care for people living with PBC.
We are too early in start-up for us to comment on the time lines for enrollment and results but Chuck will provide more detail on these studies during today's call. We now have a majority of our US medical field team in place. And they are actively engaging with the community on disease education and seladelpar clinical data and have initiated additional collaborations with the scientific community to fully understand the potential of seladelpar. We have also made significant progress this year, with pre-commercial planning efforts and we'll be accelerating these activities with positive Phase 3 pivotal results now behind us. We are currently determining the size and structure of our commercial field team to optimize its reach for effective coverage of health care providers, while also enabling patient activation in preparation for a potential seladelpar launch.
On the manufacturing and distribution front, we have now established our commercial supply chain and will soon finalize our distribution channel partners in the US. In summary, I'm extremely proud of our achievements to date. With a quality team we have put in place, and a strong balance sheet we are ready to execute on our key near-term deliverables and continue to march towards our goal of helping people with PBC, live potentially longer and better lives. With that I will turn the call over to Chuck.
Chuck McWherter: Thank you, Sujal. Drug development journey as we all know is a marathon littered with many hurdles, but there is no better feeling than entering that final mile with the finish line in sight to deliver on the promise to improve patient care. That's the feeling, we had, with the positive Phase 3 results from the RESPONSE study and the evidence is provided on the potential of seladelpar to benefit patients. Echo Smith sentiments, we are now energized more than ever and our team is dedicated to submitting a high-quality application for regulatory review as soon as possible. This quarter has seen many significant achievements on the clinical development and regulatory fronts. Two weeks ago, we announced the FDA granted a revised breakthrough therapy designation for seladelpar.
The revised designation specified seladelpar as a potential breakthrough therapy for the treatment of primary biliary cholangitis including pruritus in patients without cirrhosis or with compensated cirrhosis Child Pugh A, who are inadequate responders to or intolerant to UDCA. The breakthrough designation is for serious and life-threatening diseases for which the FDA recognizes there is a high unmet need. We are extremely gratified with this revision as it emphasizes the significant unmet need for patients dealing with the impact of pruritus, in their day-to-day functioning and underscores the unfulfilled needs of patients across a range of disease severity to include those with compensated cirrhosis. Among the benefits of a breakthrough therapy designation, is the opportunity to submit the NDA on a rolling basis and to request a priority review both of which we intend to do.
Our team is moving as quickly as we can to complete and submit a high-quality regulatory applications to FDA, MHRA and EMA for the review. We look forward to working closely, with these agencies during the review process to potentially bring seladelpar to patients with PBC as quickly as possible. Let me now provide highlights of results from our pivotal Phase 3 study response and remind you that additional details will be shared at an oral late-breaking presentation at The Liver Meeting in Boston, next Monday November 13. We will present both the time course of the effect seen across multiple endpoints, important supporting results and additional safety reporting. To remind you seladelpar met all the key prespecified trial endpoints in response, with high statistical significance.
The primary composite endpoint ALP normalization and ALP reductions from baseline is on 12, were all meaningful and highly significant. 62% of patients on seladelpar achieved the primary composite endpoint and 25% of patients receiving seladelpar had normal levels of alkaline phosphatase after 12 months of treatment. In patients with clinically significant baseline itch seladelpar had meaningful and highly significant reduction in patient reported pruritus intensity measured with an electronic diary the mean reduction of 3.2 points using the pruritus numerical rating scale. Overall safety was comparable between placebo and seladelpar groups and was consistent with previous studies. Treatment-emergent, adverse events serious adverse events and patient discontinuations were generally balanced across the treatment and placebo arms.
There were no treatment-related serious advent versus events in the study. The RESPONSE study also included voluntary paired liver biopsy for a subset of enrolled patients, an expert panel of pathologists with significant experience in cholestatic liver disease including PBC have completed a blinded review for these subjects. While we are continuing to analyze these data for intended regulatory submissions and publication we can now report that the panel concluded there were no findings requiring safety adjudication in any of the biopsies collected. We look forward to sharing more data from response during our oral late-breaking presentation to be delivered by Dr. Gideon Hirschfield a world-renowned cholestatic disease expert at The Liver Meeting in Boston next Monday.
There's more depth from the seladelpar program to share beyond RESPONSE. Last week we announced the publication in Alimentary Pharmacology & Therapeutics with the results from our first long-term safety study with two-year open-label follow-up. Treatment of more than 50 patients for two years showed strong improvements in ALP and ALT with more than 40% of patients normalizing ALP. You should expect more to come as our second long-term safety study ASSURE currently has more than 300 patients taking daily seladelpar 10 milligrams. We expect ASSURE to contribute a rich source of important information in the years to come on the long-term impact of seladelpar treatment on disease and symptoms. Now, turning to the IDEAL program that we initiated in August.
We are making good progress with site activation and initial streaming of patients. As a reminder IDEAL is a Phase 3 randomized placebo-controlled study for patients with the diagnosis of PBC taking a stable dose of UDCA unless intolerant with ALP levels between 1 and 1.67x the upper limit of normal. In effect this study targets patients who are partial responders to treatment after being treated with first-line and are not currently receiving additional treatment from which they may benefit. These patients would typically be managed by treatment of UDCA in a wait to fail paradigm in spite of the evidence for the risk of progression. We believe IDEAL has the potential to lead the way to gather critical evidence for this overlooked but sizable part of the PBC population.
Let me close out the update on the seladelpar program today with AFFIRM a randomized placebo-controlled confirmatory study to evaluate the effect of seladelpar on clinical outcomes in patients with compensated cirrhosis due to primary biliary cholangitis. The AFFIRM study was initiated to characterize the efficacy and safety of seladelpar in a PBC population with advanced disease. It is designed to fulfill post-marketing requirements for seladelpar to confirm its benefit on clinical outcomes. The AFFIRM study is planned to enroll approximately 192 patients who have compensated cirrhosis Child Pugh A or Child Pugh B based on prespecified clinical criteria. Patients will be randomized using a 2:1 ratio to oral once daily seladelpar or placebo for a fixed duration of three years.
Primary outcome measure is the time from start of treatment to the first occurrence of predefined clinical events including all-cause death, liver transplant, hospitalization for other serious liver-related events and progressing to Child Pugh C decompensated cirrhosis. Additional key outcomes include overall survival liver transplant-free survival and time hospitalization for serious liver-related events. Over the past few years we had significant interactions with regulators to develop a study in the backdrop of many known operational and ethical challenges in conducting a placebo-controlled long-term outcome study. Our efficacy and safety data among cirrhotic patients and seladelpar across Phase II and Phase III ENHANCE studies have enabled us to select this population and design it to establish the effect of seladelpar in outcomes within a reasonable time frame.
We remain fully committed to meeting our scientific and regulatory commitments while prioritizing the health of people living with PBC. Now let me shift gears and provide an update on MBX-2982. The Phase 2a proof of pharmacology study to assess whether MBX-2982 can enhance glucagon secretion during insulin-induced hypoglycemia in subjects with Type 1 diabetes has been completed. This was a placebo-controlled double-blind 2-period crossover study. Subjects with Type 1 diabetes were randomly aside in period one to treatment with daily blinded placebo or MBX-2982 for 14 days followed by 14 days of washout before starting period two which consisted of 14 days of daily dosing with the opposite treatment of either MBX-2982 or placebo. Each of these two periods ended with hyperinsulinemic hypoglycemic clamp which were conducted on day 14 and 42.
Primary objective was to compare relative to placebo treatment the effect of MBX-2982 on glucagon counterregulatory responses to insulin-induced hypoglycemia in subjects with type one diabetes. The study found that there was no change in glucagon secretion during clamps in subjects with Type 1 diabetes dosed with MBX-2982 versus placebo. In contrast healthy volunteers studied on a single occasion for comparative purposes showed a glucose-dependent increase in the glucagon release during hypoglycemia. Further target engagement by MBX-2982 was demonstrated by increases in GLP-1 levels in subjects with type one diabetes. While disappointing the results demonstrate a well-designed and executed study that demonstrated pharmacodynamic action of MBX-2982 but without demonstrating the pharmacology needed to benefit the type one diabetes population.
The scientific questions were answered and CymaBay is not planning any further studies with MBX-2982. We would like to thank Dr. Richard Pratley and his team at the AdventHealth Research Institute in Orlando, Florida as well as ProSciento Inc., California for conducting a well-designed and executed study and The Leona M. and Harry B. Helmsley Charitable Trust for their support of the study through a grant to AdventHealth. We are also grateful to the patients with type 1 diabetes and healthy volunteers for their participation in the study. Before I turn the call to Lewis, I think it is an opportune moment to mention the deployment of our field medical team and their early impact on KOL engagement, data dissemination and expanded participation in the regional PBC related medical conferences.
We have gathered a stellar medical affairs team, expertise in PBC and other rare diseases, who will be the core interface facilitating scientific exchange and addressing questions regarding the further understanding of our data. This team will also play a key role in raising awareness of PBC and the key unmet needs that remain for patients today as we interact with the medical community and patient advocates at The Liver Meeting in Boston next week and where we look forward to CymaBay and seladelpar being featured prominently. With that, I'll hand the call over to Lewis.
Lewis Stuart: Thank you, Chuck. Throughout the quarter and leading up to RESPONSE top line results, we've been focused on the expansion of our commercial leadership team. We recently added senior commercial leaders in marketing, commercial operations and market access, all while realizing progress on commercial infrastructure projects that are in alignment with our launch readiness schedule. Our leadership team comes to CymaBay with an average of over 20 years' experience, beginning in large pharma with more recent successes in emerging biopharma, where they each played an essential role in building the commercial capabilities for lead product launches. The arrival of our commercial leaders has been followed by the hiring of key commercial staff positions, including the deployment of our field-based market access team.
We're excited to begin scheduling introductory meetings with payers in parallel with the build-out of our specialty pharmacy network and other key patient support deliverables. In addition, our medical affairs team will play in a central role supporting market access in educating payers on the emerging PBC landscape and new goals for treatment. Our commercial operations team has initiated the work of standing up data and analytics platforms to support sales planning such as sales force size and structure as well as the integration of market intelligence, performance monitoring and other essential launch readiness components. We are very encouraged by the early impressions from both key opinion leaders and patient advocates both of whom expressed confidence and positivity regarding the response data set and its potential impact on seladelpar's target product profile.
Many thought leaders expressed excitement of the seladelpar offering both biochemical improvements and symptomatic relief. The rate of ALP normalization was particularly highlighted as a key differentiator alongside the statistically significant pruritus reduction. Patient advocates also welcomed the benefit on itch as a key milestone for those living with PBC given the inability of approved PBC treatments to improve symptoms that they believe play a key role in their quality of life. Given the unique properties of the delpar class seladelpar has consistently demonstrated broad clinical utility across the spectrum of PBC and may prove to be the first and only treatment that both normalizes liver biochemistries and reduces the symptom burden of pruritus.
This would be a major advance for patients and their caregivers and lead to a profile that has the potential to position seladelpar as the second-line agent of choice for PDC. Overall we are pleased with the progress we've made so far in our pre-commercial planning efforts which has only accelerated since the reporting of positive top line pivotal response study results. With that, I will hand it over to Harish.
Harish Shantharam: Thank you, Lewis. and good afternoon, everyone. As stated earlier the third quarter was a very successful one for CymaBay and seladelpar as we achieved significant milestones by delivering strong top line results from our Phase III RESPONSE trial initiating two new clinical trials IDEAL and AFFIRM and executing an upsized capital raise to strengthen our balance sheet. Operationally, all activities related to NDA preparation as well as pre-commercial planning continue to move forward at a brisk space. In terms of financials, we finished the quarter with a strong balance sheet with cash, cash equivalents and investments totaling $438.8 million as of September 30, 2023 aided by our upsized public equity offering in September.
The net proceeds from the offering were $242.8 million after deducting the underwriting discount and other offering expenses. Following the cash inflow from this offering, we believe that cash and investments on hand are sufficient to fund CymaBay's operating expenses into the first half of 2026. The Research and development expense for the quarters ended September 30 2023 and 2022 was $20 million and $15.5 million respectively. The increase was primarily driven by higher employee count and clinical activities related to initiation of our IDEAL and AFFIRM studies. As we continue to progress in the late-stage development of seladelpar in PBC we expect our overall research and development expenses to increase in the future. Turning briefly now to a review of general and administrative expenses.
These costs for the quarters ended September 30, 2023 and 2022 were $12.2 million and $5.9 million respectively. The increase in general and administrative expenses were primarily driven by commercial and medical affairs organization build and related spend in preparation for potential commercialization of seladelpar in PBC. We expect these efforts to accelerate further in the fourth quarter as we ramp up further our precommercial planning efforts. Overall, our net loss for each of the quarters ended September 30 2023 and 2022 was $33.9 million and $24.5 million or $0.32 and $0.28 per share respectively. Net loss for the quarter ended September 30 2023 was higher than the corresponding period in 2022 due primarily to an increase in operating expenses.
Overall, we expect operating expenses to increase in the future, as we continue to execute our development and potential commercialization plan for seladelpar in PBC. With that, let me hand the call back to Sujal.
Sujal Shah : Thank you, Harish. Let me close out this portion of the call by relaying some of the enthusiasm of both the team here in the room and colleagues throughout CymaBay. We are eager to continue the positive momentum and are working diligently on our near-term milestones for seladelpar and our primary goal of improving the lives of people with PBC. We are happy to now take questions. Operator?
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